Nigeria’s new tax law takes effect in 2026, reshaping how citizens and businesses pay tax.
From crypto gains to rent relief, here’s what every worker and entrepreneur should know.
The Nigeria Tax Act 2025, signed into law by President Bola Tinubu in June, will take effect on January 1, 2026. It forms part of a wider tax reform package that includes the Nigeria Tax Administration Act and the Nigeria Revenue Service Act.
These laws aim to simplify the tax system, widen the tax base, and encourage economic growth across all sectors, especially for individuals and small businesses.
Below are key questions and answers to help everyday Nigerians, including workers, traders, and entrepreneurs, understand how the new law affects them.
Q: Who does the new tax law apply to?
A: It applies to everyone earning income in Nigeria, including workers, freelancers, influencers, content creators, and traders, as well as Nigerians living abroad who are still tax residents in Nigeria.
Q: Will deposits and transfers in my bank account be taxed?
A: No. Transferring, depositing, or withdrawing money isn’t taxable. Only income earned is subject to tax.
Q: Will tax authorities monitor business accounts more closely?
A: Yes, compliance will now be easier to track. However, only profits and income are taxed, not your total account balance.
Q: I operate a one-person business. Which tax applies to me?
A: If your business is registered as an enterprise or business name, you pay Personal Income Tax. If it’s a limited liability company, you pay Company Income Tax.
Q: Who is exempt from paying personal income tax?
A: Anyone earning the national minimum wage or less, or making below ₦800,000 per year, is exempt.
Q: Will I pay tax on profits from selling shares in 2026?
A: No, unless your total share value sold exceeds ₦150 million or your profit is above ₦10 million. Anything beyond these limits becomes taxable.
Q: Are pensions taxable under the new law?
A: No. Pension and retirement benefits approved under the law remain tax-free.
Q: Will military officers now pay tax on their salaries?
A: No. Military personnel are exempt from income tax.
Q: Do entertainers and athletes still have tax exemptions on foreign income?
A: No. From 2026, Nigerian creatives, including musicians, writers, actors, comedians, and sportspeople must pay tax on both local and foreign income.
Q: Are profits from crypto and digital assets taxable?
A: Yes. Earnings from cryptocurrency, NFTs, and other digital assets are now subject to tax.
Q: What are the new personal income tax rates?
- Up to ₦800,000 – 0%
- ₦800,001 to ₦2.2 million – 15%
- ₦2.2 million to ₦9 million – 18%
- ₦9 million to ₦13 million – 21%
- ₦13 million to ₦25 million – 23%
- Above ₦50 million – 25%
Q: Will I pay tax on a large severance package if I lose my job?
A: You won’t be taxed if it’s ₦50 million or less. Any amount above that will be taxed based on the progressive rates above.
Q: If I earn dividends or rent from abroad, will it be taxed in Nigeria?
A: No, as long as those funds are brought into Nigeria through approved banking channels.
Q: Will agricultural companies pay tax under the new law?
A: No. Businesses involved in farming, livestock, forestry, or food processing will enjoy a five-year tax holiday starting from when operations begin.
Q: Are government bonds taxable?
A: No. Income from federal, state, or local government bonds is completely exempt from tax.
Q: What does the new rent relief mean for tenants?
A: From 2026, you can claim a rent relief of 20% of your annual rent, capped at ₦500,000. For instance, if your yearly rent is ₦5 million, 20% would be ₦1 million, but the maximum claim allowed is ₦500,000. You must declare your rent details to qualify.
Q: Will small companies still pay tax?
A: No. Companies with an annual turnover below ₦50 million are exempt.
Q: As a remote worker in Nigeria for a foreign company, will I be taxed?
A: Yes, unless your income is exempt under a double taxation treaty or diplomatic agreement between Nigeria and that country.
